Price hikes - but not everyone loses out!

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14 July 2008

For months we were told that if food bills were soaring, it was due to world market price hikes. This was so convenient: neither us, nor the supermarket giants could do anything about it, and all that was left for us to do was to foot the bill!

That speculators have flooded food markets with their spare capital, after the housing bubble burst, is unquestionable. Hundreds of billions of pounds were shifted to these markets for speculative purposes, thereby pushing prices up - just as happened with oil. The question is, however, whether the prices which British food giants pay for their supplies have increased in the same proportion? In fact, they have not!

An illustration of this has just been provided by Britain's 2nd largest food and retail giant, Associated British Foods (ABF).

ABF has just increased the price of one of its loaves of packaged bread by 12%, following a previous 13% increase this year. It also released its sales figures for the past 4 months. Overall, compared to 2007, its sales are 24% up in value. But for its food divisions, the figure is 42% - more than twice the average increase in food prices on the world market, meaning that ABF used the opportunity to increase its profit margins!

ABF is not an isolated case. The gas and oil giants play the same game. The headline "world price of oil", which the media quote ad nauseum as the cause of all ills, gives them an ideal pretext to push prices up - and their profit margins up, into the bargain. The working class ends up being caught between the speculators and the companies, both hiding behind the artificial impact of speculation in order to boost their profits. But this does not mean our only option is to let our living standards sink.

We may not be able to stop the speculation on food and oil markets nor to stop the profiteering of ABF and its like. But we should remember that, one way or another, all the capitalists, their politicians and their state are together in this game. They are collectively responsible for the cut in our living standards and they collectively benefit from it. It is only right that they should pay for it, with wage increases which are in line with the real increase in the cost of living that we face!